Quote from Ali Scarlett on January 25, 2024, 1:33 am

Hi Bel,

I'd probably go for a very different approach.

Focusing on what's specified in a contract can ignore how people may feel about it. And, in the end, it's feelings that can make or break a client relationship.

So, generally speaking, I think the best option would be to:

• Provide reasoning: the idea you suggested takes away their freedom/power to be involved in the decision—even though they have to pay for the consequences of it. So, to power-protect and keep rapport, I'd provide a reason.
• Make your reasoning as honest as possible: I see little downsides to it in this case.

You can simply say something like:

Bel: "I wanted to have this meeting today because there are some internal changes going on (this way, you frame it as a change with you and your business and don't have to lie that it's about new value you'll be providing—this framing also implies that these changes may apply to everyone, not just them, which preserves rapport) and given our long-standing relationship, I wanted to tell you in person first. Our contract entails an annual increase to my legal fee (beginning with honest exchange talk). However, due to the circumstances at the time when we first started working together, I decided to waive the fee (now you continue again with the honesty that it's about a change in circumstances—and it's true, your time is worth more now than it was then). A lot of time has passed since then and I didn't see a need to raise the fee since we were already working well together at the current rate (this avoids framing it as if your time was worth a lot less back then and instead frames it as if your time was always valuable—hence why it was in the contract—you simply decided to waive the fee as a professional courtesy). Unfortunately, though, circumstances have recently changed on our end and I'll be raising the rates for my clients. So, moving forward, our rate increase will be 15%..."

Then, since you want to avoid losing this client, I'd actually leave it up to them whether they accept the new rate or not (which can be a great opportunity to assess them and their character too):

Bel: "With that said, I value our working relationship and only want to move forward with a rate you're happy with (now, with the previous framing, it's a question of whether they're happy to pay you fairly or not and the pressure is on them to say "yes" or "no"). So, I'll leave it up to you (de-emphasize persuasion technique)."

Then, wait and see what they say.

If they say "yes," great, you get a rate increase.

If they say "no," great, you get to keep a high-paying client. (No harm, no foul.)

Happy to read any thoughts.

Edit:

Also, as always, you know the proper legal terminology and more about the character of your counterpart and the situation. So, feel free to tailor the above accordingly.

Quote from B on January 25, 2024, 12:39 pm

Thank you so much Ali,

it's extremely helpful.

I agree on the need for an introduction to this raise, and the script is awesome.

Only points of doubt on my side:

• I fear that giving a motivation without specifying it may lead the client to think my firm is not going well.
• Also, have a bad feeling on asking for client agreement on the raise.

I'll think about it some more.

Quote from Ali Scarlett on January 25, 2024, 4:21 pm

Quote from Bel on January 25, 2024, 12:39 pm

(...)

• I fear that giving a motivation without specifying it may lead the client to think my firm is not going well.

(...)

Yeah, that can be a possibility and I should've clarified the approach more.

It's not that "things are going bad and you need more money to stay afloat." It's that "you're undergoing some growing pains and you're charging new rates to cover new expenses."

However, that's not something I wanted to specify because it's not necessarily true that you have new costs. From what I gather, you just want to get paid the fair amount you both agreed upon in the contract.

The issue with that honesty is that chances are good they won't care.

Pointing back to the social exchange, the current agreement has become the new norm so they'll feel entitled to more value if they have to pay more money now.

So, you're only options are to:

• Disregard the social exchange: and be honest that you just want more money and see what they say (which may lead to a back-and-forth negotiation where you have little room to get your way because you're bringing no new value)
• Ignore their feelings on the social exchange: and assume an increase would be OK (which may break rapport and lose the deal/relationship)
• Acknowledge their feelings on the social exchange: and request an increase (which would be a lower power approach and may carry a higher chance of getting denied)
• Acknowledge their feelings on the social exchange: and assume an increase would be OK, but leave them with the final decision (which would be a higher power approach combined with power protecting to keep rapport)

That final bullet point is what I suggest.

But, of course, I'd wait to get some more thoughts from other members before making any final decisions.

Quote from B on January 25, 2024, 4:36 pm

Thank you, Ali.

My idea was basically a "recover inflation" and "recover difference between previous fee and now-updated expertise" fee increase.

The idea was that I wouldn't want to discuss the social exchange, since that would open a vast scenario of unpredictable possibilities.

It was more a "10 years have passed and I am still adopting the fees of a young lawyer - I need to increase it at least a bit".

On the social exchange side, my internal thoughts are that my expertise, help and quickness have increased - so to me it's only fair that the rate I applied 10 years ago is increased.

Some people in the client's organization have more than once told me in various ways that my assistance has become more helpful with each year.

Though being a big company, not everyone may think so or even be aware of this, I understand.

I also realize that increasing my fee - even though it may make sense from my "internal perspective" - would best be done when I am significantly increasing clients, which I currently seem to be doing but at a very slow rate - maybe not much to justify the "risk".

EDIT: Elaborating more:

I believe this is more to establish the principle that - in my "work lifetime" - my price will increase with my legal expertise, than actually deriving a gain from this.

I made a projection and the 15% increase would translate into a very limited final increase in my fees.

But what I don't want, is to let the message pass that I'll keep working at a relatively "low fee" - that of a young lawyer - forever.

Quote from B on January 27, 2024, 1:19 am

Hi Ali,

I reflected on what you posted, and also researched a bit the topic on the net as regards lawyers' fees increases. This is what I found, that is mostly in line with what you said:

• time the request in accordance with the client's tax year
• best to ask the CEO for a personal meeting to discuss the lawyer client relationship, at the client's place (ie no phone call, contrary to what I initially thought: I thought that a meeting was a burden on the CEO's time)
• at the meeting: provide justification
• limit the raise to a single digit percentage (ie 5%) or at most to 10%
• ask for client agreement while framing the ask as a question to know if the proposed raise is within the legal budget of the company
• anticipate the proposed raise by at least 4 months

So I'm thinking of something like this, mostly in line with what you first proposed:

Me: X, I wanted to see you in person as I wanted to talk about our engagement agreement for my work as lawyer for the Company. As you know, I have been assisting Company for years so far and have agreed to a discounted rate that was asked of me by former CEO.

After several years, however, I need to raise the hourly rate to keep in line with the increased complexity of the assistance that is requested of me and to cover inflation and costs.

That said, I value our work relationship. You're an important client to me. So it's very important to me that this is handled with your full agreement and is in line with your legal budget. That's why I wanted to talk to you.

I am increasing my rate for all clients by 15%. In your case, however, for next year I can limit the raise to 10%. Would that be ok for you?

* click on blockquote to expand

This seems more in line with your script, highlights that my initial approach was totally wrong :) , and underlies the enormous complexity of this move for me.

In other words, this requires very careful planning and flawless execution. But it's undoubtedly a very useful skill as a lawyer.

That said, many of the sources I examined point out that rasing rates is best done when client base is substantially increasing.

So I might even forgo this for now, and think about it at the end of the year.

Happy to read any thoughts on this.

Quote from Ali Scarlett on January 27, 2024, 2:29 am

Awesome script, Bel, I think that's the best one.

The only tweaks I might make are:

Current Script: "That said, I value our work relationship. You're an important client to me...I am increasing my rate for all clients by 15%. In your case, however, for next year I can limit the raise to 10%. (<---- this frames them as a really important client you're willing to go the extra mile for which potentially overinflates their value in their mind) Would that be ok for you?"

Adjusted Script: "That said, I value our work relationship...I am increasing my rate for all clients by 15%. In your case, however, since you're an important client to me, I'm happy to continue working with you, and we've been working together so well, for next year I can limit the raise to 10%. (<---- this frames it as if you're making an exception for them not only because they're important, but because they're a cooperative client and you're happy to do it as a professional courtesy) Would you be completely against that (no-oriented question technique)?"

The original script may position you too low in power and, if they're takers, may make them feel comfortable using it as an opportunity to leech (and feel confident doing so since they feel you need them).

With the adjusted approach, you avoid them taking your kindness for weakness and limit the chances of them trying to spin the situation/social exchange in their favor.

But, it may not be necessary, could be a mistake (as someone who still has more to learn about power dynamics), and, as always, you know the situation better.